Expect performance to improve from Q4: Info Edge

Info Edge reported a net profit of Rs 33.32 crore in the second quarter of the current fiscal against Rs 31.78 crore last quarter. The company posted net sales of Rs 106.45 crore versus Rs 106 crore in Q1.

Ambaresh Raghuvanshi, CFO, Info Edge expects the company's performance to improve from Q4 and added that the hiring environment has been weak in the second quarter. Besides, he does not see much pressure on pricing at the moment. Here is the edited transcript of the interview on CNBC-TV18. Q: Take us through the numbers. It is a tepid growth, the top-line is almost flat and a bottom-line growth of about less than 10 percent. How is the volume of business growing?
A: Top-line growth is close to 17 percent if you see on a year on year basis but, on a sequential quarter basis it is close to flat. On a year on year basis, profit after tax is up about 18 percent but, at the operating level they are down a little bit. They are up only about 13 percent.
There are two or three broad themes which are playing out right now. The weak macro environment is leading to a weak hiring environment which in turn means fewer companies hiring, people taking longer to make decisions and that is all part of an environment which is uncertain with a weak growth scenario.
The other important theme here is that we are continuing to invest in growth in several of our initiatives including 99acres. So 99 acres for example, had grown at more than 52 percent in a somewhat weak real estate transaction scenario. That is pretty good news because we are clearly demonstrating a lot of value to people who are looking to sell property in a tough environment. Q: How would you forecast the revenues of Info Edge for the second half, have you seen a genuine increase in the number of people who want to advertise and who want to hire?
A: To be honest with you, we are not seeing any such increase. I don’t think we will not see an increase for at least another quarter. Seasonably, quarter three is somewhat weaker because of the number of holidays and the festivals and so on. Generally, things like important business decision making takes a little bit of a backseat in quarter three.
I don't think we are going to see an immediate improvement. For quarter four, right now it is uncertain but I would say that we are cautiously optimistic. Right now the street is pretty positive about all the announcements and so on but, I don’t think it is showing up in the numbers. 
Unless it begins to show up in the numbers, companies are unlikely to start hiring or ramp up hiring big time straight away. It will take a bit of time for companies to adjust to that. To some extent, we are a lagging indicator. We see the positive effects of it after a quarter of some sort of growth. If quarter three numbers look better, I think from fourth quarter we could see some growth but, it is too uncertain and there are too many variables, too many moving parts in the macro right now.
_PAGEBREAK_ Q: Tell us if you are sacrificing on pricing, if the hiring environment is slow to encourage your clients to take solutions are you looking to sacrifice a bit on pricing? You would still be quoting at a slight premium to your peers?
A: We are quoting at a premium to our peers. You are absolutely right. But that is not necessarily to do just with the environment. While pricing is determined by near term factors or short term factors like the economy or the macro factors in the near term, in the medium-term it is more structural factors like competitive position. There we are reasonably well positioned.
We have more than 60 percent share of traffic and that gives us the pricing power. I don’t think we are in any sort of immediate hurry to bring down prices. This is not 2008 when you saw a big bang event and everything froze over all at one go. This time it is slightly more gradual, more linear. We will play it as we go along. What we are seeing right now is not so much a pressure on pricing but, it is on clients just not agreeing to upgrade.
A lot of our growth comes from clients as they ramp up hiring numbers, they need to upgrade solutions from us and that is somewhat weak. The small and medium enterprises are probably hit a little more than the larger companies. Q: What about the investing companies? By when do you see them attaining critical mass so that they start contributing positively to your bottom-line, any guidance or any kind of forward looking statements if you can make?
A: Like any other internet business, there is a lot of uncertainty for businesses in the early stage. But in terms of critical mass at least two or three of these businesses, at least in terms of top-line are already beginning to deliver some value.
Policy bazaar for example is already used to some particular size. We have invested in a mid stage company called Canvera in the last quarter. It is a photo sharing, photo album site and that already has significant revenues. But, on bottom-line I think there is probably another couple of years before we begin to see some sort of positive effect on our numbers through the bottom-line. There I think critical mass or a critical point will probably be at least another couple of years away.